The impact of business regulations on bank performance in the European Union (2000-2010)

This thesis examines the impact of several types of business regulations on bank performance, as measured by cost efficiency, in the EU economies over the 2000-2010 periods. First we investigate the impact of credit, labour and business regulation on the performance of the banking systems of the EU-10. The regulation indices are sourced from the Fraser Index of Economic Freedom (Gwartney et. al, 2012). In further analysis, we decompose the credit regulation variable in its components (private ownership of banks, foreign bank competition, private sector credit, limitations from interest rate controls and regulations) in order to find which type of credit regulation is more important for performance. Second, we examine the impact of several type of business regulations derived from the “Doing Business” project of the World Bank on bank performance as measured by cost efficiency in the EU-10 economies. More specifically we use regulation indices related to: i) starting a business, ii) getting credit, iii) paying taxes, iv) enforcing contracts, v) resolving insolvency, vi) protecting investors, and vii) employing workers. We put special emphasis on regulations related to “getting credit”, “paying taxes” and “starting a business” as the first type is directly relevant to the banking sector while the next two on the top of the EU agenda. In further analysis we investigate if the impact of business regulation on bank performance is influenced by institutional quality as measured by rule of law and corruption variables. Third, we assess the impact of different types of labour regulation on bank performance, as measured by cost efficiency, in the five countries of the eurozone periphery (Greece, Ireland, Italy, Portugal, Spain) over the 2000-2010 periods. We source the labour regulation variables from the Fraser Index of Economic Freedom (Gwartney et. al, 2012) and from the Employment Protection Index produced by the Organisation for Economic Co-operation and Development (OECD). In further analysis we investigate if the impact of labour regulation on bank performance is influenced by the country-level law enforcement capacity. Finally, some conclusions are provided along with limitations of this research and an agenda for future work

Особенности экологизированных лабораторных работ

Using a conviction-based measure, we find that local (state-level) public corruption exerts a negative effect on the lending activity of US banks. Our baseline estimations show that the difference in public corruption between, for example, Alabama, where corruption is high, and Minnesota, where corruption is low, implies that banks headquartered in the former state grant 0.55% less credit (or $3.52 million for the average bank) ceteris paribus. Using proxies for relationship lending and monitoring, we also find that these bank characteristics weaken the negative effect of public corruption on lending. These results are robust to tests that address endogeneity, to the use of perception-based measures of corruption, and after controlling for credit demand conditions. In further analysis, we show that these effects are more evident for smaller banks and banks operating in a single state. These findings provide evidence that public corruption could facilitate information asymmetry in the lending market and, thus, could hinder local development by reducing bank credit

Does tax enforcement matter for the cost of bank loans? Evidence from the United States

We examine the relationship between the tax enforcement effort of the internal revenue service (IRS) and the cost of bank loans in the US syndicated market. We measure tax enforcement by the rate of IRS audits and find that it decreases bank loan spreads. This finding holds in a series of robustness and sensitivity tests such as the use of alternative IRS tax enforcement measures, instrumental variable regressions, panel data estimations and a quasi-experimental framework of the Section 404b of the Sarbanes-Oxley (SOX) Act. We also find that the negative effect of IRS tax enforcement on loan spreads strengthens for smaller corporations. In addition, we show that stringent IRS tax enforcement decreases the probability that loan contracts will contain covenants. Overall, these findings suggest that banks acknowledge the informational and monitoring role of tax enforcement in the private debt market

Canalicular adenoma with unicystic morphology. A rare entity

Canalicular adenoma (CA) is a benign salivary gland tumor (SGT) almost exclusively affecting the minor salivary glands, predominantly of the upper lip, and exhibiting characteristic histopathologic features. As observed in several other SGTs, a commonly

MIBiG 3.0 : a community-driven effort to annotate experimentally validated biosynthetic gene clusters

With an ever-increasing amount of (meta)genomic data being deposited in sequence databases, (meta)genome mining for natural product biosynthetic pathways occupies a critical role in the discovery of novel pharmaceutical drugs, crop protection agents and biomaterials. The genes that encode these pathways are often organised into biosynthetic gene clusters (BGCs). In 2015, we defined the Minimum Information about a Biosynthetic Gene cluster (MIBiG): a standardised data format that describes the minimally required information to uniquely characterise a BGC. We simultaneously constructed an accompanying online database of BGCs, which has since been widely used by the community as a reference dataset for BGCs and was expanded to 2021 entries in 2019 (MIBiG 2.0). Here, we describe MIBiG 3.0, a database update comprising large-scale validation and re-annotation of existing entries and 661 new entries. Particular attention was paid to the annotation of compound structures and biological activities, as well as protein domain selectivities. Together, these new features keep the database up-to-date, and will provide new opportunities for the scientific community to use its freely available data, e.g. for the training of new machine learning models to predict sequence-structure-function relationships for diverse natural products. MIBiG 3.0 is accessible online at https://mibig.secondarymetabolites.org/

Do creditor rights and information sharing affect the performance of foreign banks?

This paper examines the effect of host economy creditor rights and information sharing on the profit performance of foreign banks vis-à-vis domestic banks for a global sample of commercial banks over the 2005-2009 period. To this end, we employ the recent foreign bank ownership dataset of Claessens and Van Horen (2014) and measure performance as profit efficiency using the alternative profit function. Results from the Battese and Coelli (1995) stochastic frontier analysis model show that creditor rights exert a positive effect on efficiency that strengthens for foreign banks. On the other hand, information sharing exerts a negative effect on profit efficiency which strengthens for foreign banks. The results for information sharing show some variability across different levels of development of the host economy. Moreover, the transparency of the host economy moderates the effect of creditor rights and information sharing on foreign bank efficiency. We also examine the effect of ". institutional distance" in creditor rights and information sharing between the home and host economy on foreign bank efficiency. The effect of creditor rights ". institutional distance" on foreign bank efficiency is negative, while it turns positive for information sharing. These findings highlight the importance of strong creditor rights for foreign bank performance and are useful for both regulators in host economies and foreign bank managers.</p

Does IRS Monitoring Matter for the Cost of Bank Loans?

We show that IRS monitoring exerts a significantly negative effect on the cost of syndicated loans. A one standard deviation increase in the probability of an IRS audit decreases loan spreads by around nine basis points. We also find that this effect is stronger for borrowers with better lending relationships and credible access to public markets. These results indicate that IRS monitoring could increase the bargaining power of borrowers and restrain banks from extracting informational rents from their lending relationships. Thus, they provide a novel insight into how IRS monitoring could lower the cost of financing from the banking system

Does regulation in credit, labour and business matter for bank performance in the EU-10 economies?

Cost efficiency scores for banks in ten new EU member countries of Central and Eastern Europe are estimated using a parametric approach (data envelopment analysis) for the period prior to and immediately following their accession (2000–2010). These are then used in both fixed effects and dynamic panels to estimate the impact of regulation on bank specific efficiency in the transition economies of the EU. Using the Fraser Index of Economic Freedom (Gwartney, Hall, and Lawson 2012) we find that, among all the indices of economic freedom, the composite regulation index that includes regulation in credit, labour and business has more importance for the banking sector as results suggest a positive and statistically significant impact on bank efficiency. By decomposing the regulation index into its three components (credit, business and labour regulation) we find that strict labour regulation is associated with lower bank cost efficiency while certain aspects of credit regulation such as foreign ownership and competition as well as private ownership are significantly associated with improved efficiency. The dynamic panel vector autoregression (VAR) results using impulse response functions and variance decomposition further support the validity of these results. These findings are valuable for both academics and policy makers in their attempts to understand the drivers of bank efficiency

Does IRS monitoring matter for the cost of bank loans?

Abstract We show that IRS monitoring exerts a significantly negative effect on the cost of syndicated loans. A one standard deviation increase in the probability of an IRS audit decreases loan spreads by around nine basis points. We also find that this effect is stronger for borrowers with better lending relationships and credible access to public markets. These results indicate that IRS monitoring could increase the bargaining power of borrowers and restrain banks from extracting informational rents from their lending relationships. Thus, they provide a novel insight into how IRS monitoring could lower the cost of financing from the banking system